Abstract [en]

Shortly after Bank of America signed a Share Purchase Agreement to acquire Merrill Lynch, but prior to the closing of the deal, Merrill posted a $25 billion quarterly loss. Compared to the purchase price of $50 billion, it wasn’t a surprise that Bank of America moved to terminate the deal by asserting that the loss was a Materially Adverse Change.

The purpose of this essay is to find the optimal MAC clause in Swedish law, which means a widely applicable and cure many of the problems the clause has in the US and England.

A material adverse change clause is often included in share purchase agreements as a way for the buyer to terminate the deal in case anything happens that have or may have a materially adverse effect on the target company. In Swedish, US and UK law, there are no solutions for this general risk in the contract law.

The case law in the US and England is of interest, as there is practically no Swedish case law on this subject. In the US and England, courts have chosen a very strict interpretation of the MAC clause, with Delaware court never declaring a MAC event to have taken place despite numerous cases.

Swedish courts would interpret a MAC clause either by making comparisons to Swedish law, or by being influenced by the foreign case law. Either solution would in my opinion probably lead to a strict interpretation, which would be against the parties’ intentions when drafting the clause.

I provide some suggestions on an optimal MAC clause in Swedish law. The main concepts are to first change the wording of MAC in Swedish, as to avoid links to current concepts in Swedish contract law, but also to define materiality as well as changing the result of invoking the MAC clause.